Rental Agreement
Car rental:
In addition to the above, a car rental agreement may include various restrictions on the way a renter can use a car, and the condition in which it
must be returned. For example, some rentals cannot be driven off-road, or out of the country, or towing a trailer, without specific permission.
In New Zealand you may have to specifically endorse a promise that the car will not be driven onto Ninety-mile Beach (because of the hazardous tides).
There will certainly be a requirement to show a driver's license, and only those drivers appearing on the contract may be authorized to drive.
It may include an option to purchase auto insurance (motor insurance, UK), if the renter does not already have a policy to cover rentals -- another
important consideration for multiple drivers. Some agencies may even require a bond payable if the car is not returned in order, often held
in the form of a credit-card authorization -- voided if the car is returned per agreement. A renter should be advised that he or she will be
responsible for any parking or traffic violations incurred upon the vehicle during the rental period. There should also be advice on handling
thefts, accidents, break-downs, and towing.
Further terms may include added fees for late returns, drop-off at a different location, or failure to top up the petrol immediately before the return.
Finally, there may be provisions for making a non-refundable deposit with a booking, terms for payment of the initial period (with discounts,
vouchers, etc), extended periods, and any damages or other fees that accrue prior to the return.
Real estate rental:
A rental agreement is often called a lease, especially when real estate is rented. In addition to the basics of a
rental
(who, what, when, how much),
a real estate rental may go into much more detail on these and other issues. The real estate may be rented for housing, parking a vehicle(s),
storage, business, agricultural, institutional, or government use, or other reasons.
Who: The parties involved in the contract, the lessor (sometimes called the owner or landlord) and the lessee (sometimes called the renter or
tenant) are identified in the contract. A housing lease may specify whether the renter is living alone, with family, children, room-mate,
visitors. A rental may delineate the rights and obligations of each of these. For example, a "sub-let" to a stranger might not be permitted
without permission of the landlord. This also applies to whether or not pets may be kept by the renter. On the other hand, the renter may
also have specific rights against intrusions by the landlord (or other tenants), except under emergency circumstances. A renter is in
possession of the property, and a landlord would be trespassing upon the renter's rights if entry is made without proper notice and
authority (e.g., 24 hours' notice, daytime, knock first, except for emergency repairs, in case of fire, flood, etc).
What: Rented real estate may include all or part of almost any real property, such as an apartment, house, building,
business office(s)
or suite, land, farm, or merely an inside or outside space to park a vehicle, or store things. The premises rented may include not
only specific rooms, but also access to other common areas such as off-street parking, basement or attic storage, laundry facility,
pool, roof-deck, balconies, etc. The agreement may specify how and when these places may be used, and by whom. There may be detailed
description of the current condition of the premises, for comparison with the condition at the time the premises are surrendered.
When: the term of the rental may be for a night (e.g., a hotel room), weeks, months, or years. There may be statutory provisions
requiring registration of any rental that could extend for more than a specified number of years (e.g., seven) in order to be
enforceable against a new landlord.
A typical rental is either annual or month-to-month, and the amount of rent may be different for long-term renters (because of
lower turnover costs). Leaving a long-term lease before its expiration could result in penalties, or even the cost of the entire
agreed period (if the landlord is unable to find a suitable replacement tenant, after diligent pursuit). If a tenant stays beyond
the end of a lease for a term of years (one or more), then the parties may agree that the lease will be automatically renewed,
or it may simply convert to a tenancy at will (month-to-month) at the pro-rated monthly cost of the previous annual lease.
If a tenant at will is given notice to quit the premises, and refuses to do so, the landlord then begins eviction proceedings.
In many places it is completely illegal to change locks on doors, or remove personal belongings, let alone forcibly eject a person,
without a court order of eviction. There may be strict rules of procedure, and stiff penalties (triple damages, plus attorneys' fees) for violations.
How much: Rent may be payable monthly, annually, or in advance, or as otherwise agreed. A typical arrangement for tenancy at
will is "first and last month's rent" plus a security deposit. The "last month's rent" is rent that has yet to be earned by the landlord.
Deposit:
The security deposit is often handled as an escrow deposit, owned by the tenant, but held by the landlord until the premises are
surrendered in good condition (ordinary wear and tear excepted). In some states, the landlord must provide the tenant with the name
and account number of the bank where the security deposit is held, and pay annual interest to the tenant. Other regulations may
require the landlord to submit a list of pre-existing damage to the property, or forfeit the security deposit immediately
(because there is no way to determine whether a prior tenant was responsible).
In the field of taxation, a deposit is not included as gross income to the receiving party until the depositing party chooses to apply the
funds to purchase services. A 1990 ruling[1] provides that a deposit differs from an advance payment because the depositing party has
dominion over the funds and retains the right to insist upon repayment in cash. On the other hand, the party making an advance payment
retains no right to insist upon the return of the funds as long as the recipient fulfills the contractual agreement.
The rationale behind the court’s decision is that the recipient of the deposit does not enjoy “complete dominion” over the funds and is
subject to an express obligation to repay so long as the customer fulfills his or her legal obligations. Additionally, both the timing
and the method of refund are largely within the control of the depositing party, as he or she can choose to insist upon repayment in cash
or apply the deposit to purchase services. The recipient’s right to retain the funds of the deposit is contingent upon events that are
outside of his or her control.
An important note is that although the recipient may receive an economic benefit from the deposits – i.e. interest – the prospect that
income will be generated provides no ground for taxing the principal. However, any income that the recipient may earn through the use of
the deposit money is, of course, taxable.
Security deposits are required most often by lessors of automobiles, apartments, and commercial real estate.
The security deposits required by many residential landlords of their tenants are the source of much dispute and litigation. Many states
and municipalities have enacted laws that specifically regulate the landlord's ability to withhold tenant security deposits after a tenant
moves out. Some states and cities require that interest be paid to the tenant as it is earned on the security deposit. Washington DC,
Alaska, Illinois, and Wisconsin have notably more tenant-friendly legislation in place than states like Indiana or Michigan, for example.
Within Illinois and Wisconsin, the cities of Madison, Wisconsin and Chicago, Illinois have in place substantially greater protection of
tenants' security deposit rights than the surrounding areas.
Insurance:
In order to rent or lease in many apartment buildings, a renter (also referred to as a “lessee") is often required to provide proof of
renters insurance before signing the rental agreement. There is a special type of the homeowners insurance in the United States
specifically for renters — HO-4. This is commonly referred to as renter’s insurance or renter's coverage. Similar to condominium coverage,
referred to as a HO-6 policy, a renter's insurance policy covers those aspects of the apartment and its contents not specifically covered
in the blanket policy written for the complex. This policy can also cover liabilities arising from accidents and intentional injuries for
guests as well as passers-by up to 150' of the domicile. Renter’s policies provide "named peril" coverage, meaning the policy states
specifically what you are insured against. Common coverage areas are:
References
- About Renter’s Insurance", ”Geico” Retrieved 3 May 2008
- Wiening, Eric; George Rejda, Constance Luthardt, Cheryl Ferguson (2002). Personal Insurance (1st edition ed.). Malvern, Pennsylvania: American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America. ISBN 0-89463-108-X.
- Wikipedia.org
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